FORM OF AMERICAN BEACON FUNDS INVESTMENT ADVISORY AGREEMENT
Exhibit (d)(ii)(K)
AGREEMENT made this 12th day of September, 2008 by and between American Beacon
Advisors, Inc., a Delaware Corporation (the “Manager”), and Metropolitan West Capital Management,
LLC (the “Adviser”);
WHEREAS, American Beacon Funds (the “Trust”), a Massachusetts Business Trust, is an open-end,
diversified management investment company registered under the Investment Company Act of 1940, as
amended, consisting of several series (portfolios) of shares, each having its own investment
policies; and
WHEREAS, the Trust has retained the Manager to provide the Trust with business and asset
management services, subject to the control of the Board of Trustees;
WHEREAS, the Trust’s agreement with the Manager permits the Manager to delegate to other
parties certain of its asset management responsibilities; and
WHEREAS, the Manager desires to retain the Adviser to render investment management services to
the Trust with respect to certain of its investment portfolios and such other investment portfolios
as the Trust and the Adviser may agree upon and so specify in the Schedule(s) attached hereto
(collectively the “Portfolios”) and as described in the Trust’s registration statement on Form N-1A
as amended from time to time, and the Adviser is willing to render such services;
NOW, THEREFORE, in consideration of mutual covenants herein contained, the parties hereto
agree as follows:
1. Duties of the Adviser. The Manager employs the Adviser to manage the investment and
reinvestment of such portion, if any, of the Portfolios’ assets as is designated by the Manager
from time to time, and, with respect to such assets, to continuously review, supervise, and
administer the investment program of the Portfolios, to determine in the Adviser’s discretion the
securities to be purchased or sold, to provide the Manager and the Trust with records concerning
the Adviser’s activities which the Trust is required to maintain, and to render regular reports to
the Manager and to the Trust’s officers and Trustees concerning the Adviser’s discharge of the
foregoing responsibilities. The Adviser shall discharge the foregoing responsibilities subject to
the Manager’s oversight and the control of the officers and the Trustees of the Trust and in
compliance with such policies as the Trustees may from time to time establish, and in compliance
with the objectives, policies, and limitations for each such Portfolio set forth in the Trust’s
current registration statement as amended from time to time and applicable laws and regulations.
The Adviser accepts such employment and agrees to render the services for the compensation
specified herein and to provide at its own expense the office space, furnishings and equipment and
the personnel required by it to perform the services on the terms and for the compensation provided
herein. (With respect to any of the Portfolio assets allocated for management by the Adviser, the
Adviser can request that the Manager make the investment
decisions with respect to that portion of assets which the Adviser deems should be invested in
short-term money market instruments. The Manager agrees to provide this service.) The Manager
will instruct the Trust’s Custodian(s) to hold and/or transfer the Portfolios’ assets in accordance
with Proper Instructions received from the Adviser. (For this purpose, the term “Proper
Instructions” shall have the meaning(s) specified in the applicable agreement(s) between the Trust
and its custodian(s).) The Adviser will not be responsible for the cost of securities or brokerage
commissions or any other Trust expenses except as specified in this Agreement.
2. Portfolio Transactions. The Adviser is authorized to select the brokers or dealers
(including, to the extent permitted by law and applicable Trust guidelines, the Adviser or any of
its affiliates) that will execute the purchases and sales of portfolio securities for the
Portfolios and is directed to use its best efforts to obtain the best net results with respect to
brokers’ commissions and discounts as described in the Trust’s current registration statement as
amended from time to time. In selecting brokers or dealers, the Adviser may give consideration to
factors other than price, including, but not limited to, research services and market information.
Any such services or information which the Adviser receives in connection with activities for the
Trust may also be used for the benefit of other clients and customers of the Adviser or any of its
affiliates. The Adviser will promptly communicate to the Manager and to the officers and the
Trustees of the Trust such information relating to portfolio transactions as they may reasonably
request. The Adviser shall not, without the prior approval of the Manager, effect any transactions
which would cause the portion of the Portfolio’s assets designated to the Adviser to be out of
compliance with any restrictions or policies of the Portfolio established by the Manager or set
forth in the Portfolio’s registration statement. The Adviser shall not consult with any other
investment sub-adviser of the Portfolio concerning transactions for the Portfolio in securities or
other assets.”
3. Voting Rights. The Trust will exercise voting rights on any assets held in the
Portfolios.
4. Compensation of the Adviser. For the services to be rendered by the Adviser as
provided in Sections 1 and 2 of this Agreement, the Manager shall pay to the Adviser compensation
at the rate specified in Schedule A attached hereto and made a part of this Agreement. Such
compensation shall be paid to the Adviser quarterly in arrears, and shall be calculated by applying
the annual percentage rate(s) as specified in the attached Schedule A to the average daily assets
of the specified portfolios during the relevant quarter. Solely for the purpose of calculating the
applicable annual percentage rates specified in the attached Schedule(s), there shall be included
such other assets as are specified in said Schedule(s).
The Adviser agrees that the fee charged to the Manager will be no more than that charged for any
other client of similar type. Furthermore, the Adviser agrees to notify the Manager on a timely
basis of any fee schedule it enters into with any other client of similar type which is lower than
the fee paid by the Manager.
5. Other Services. At the request of the Trust or the Manager, the Adviser in its
discretion may make available to the Trust office facilities, equipment, personnel, and other
services. Such
office facilities, equipment, personnel and services shall be provided for or rendered by the
Adviser and billed to the Trust or the Manager at a price to be agreed upon by the Adviser and the
Trust or the Manager.
6. Reports. The Manager (on behalf of the Trust) and the Adviser agree to furnish to
each other, if applicable, current prospectuses, proxy statements, reports to shareholders,
certified copies of their financial statements, and such other information with regard to their
affairs as each may reasonable request.
7. Status of Adviser. The services of the Adviser to the Trust are not to be deemed
exclusive, and the Adviser and its directors, officers, employees and affiliates shall be free to
render similar services to others so long as its services to the Trust are not impaired thereby.
The Adviser shall be deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Manager or the Trust in any
way or otherwise be deemed an agent to the Manager of the Trust.
8. Certain Records. Any records required to be maintained and preserved pursuant to
the provisions of Rule 31a-1 and Rule 31a-2 promulgated under the Investment Company Act of 1940
which are prepared or maintained by the Adviser on behalf of the Manager or the Trust are the
property of the Manager or the Trust and will be surrendered promptly to the Manager or Trust on
request.
9. Liability of Adviser. No provision of this Agreement shall be deemed to protect the
Adviser against any liability to the Trust or its shareholders to which it might otherwise be
subject by reason of any willful misfeasance, bad faith, or gross negligence in the performance of
its duties or the reckless disregard of its obligations under this Agreement.
10. Permissible Interests. To the extent permitted by law, Trustees, agents, and
shareholders of the Trust are or may be interested in the Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise; directors, partners, officers,
agents, and shareholders of the Adviser are or may be interested in the Trust as Trustees,
shareholders or otherwise; and the Adviser (or any successor thereof) is or may be interested in
the Trust as a shareholder or otherwise; provided that all such interests shall be fully disclosed
between the parties on an ongoing basis and in the Trust’s registration statement as required by
law.
11. Duration and Termination. This Agreement, unless sooner terminated as provided
herein, shall continue for two years after its initial approval as to each Portfolio and thereafter
for periods of one year for so long as such continuance thereafter is specifically approved at
least annually (a) by the vote of a majority of those Trustees of the Trust who are not parties to
this Agreement or interested persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval, and (b) by the Trustees of the Trust or by vote of a majority
of the outstanding voting securities of each Portfolio; provided, however, that if the shareholders
of any Portfolio fail to approve the Agreement as provided herein, the Adviser may continue to
serve hereunder in the manner and to the extent permitted by the Investment Company Act of 1940 and
rules thereunder. The foregoing requirement that continuance of this Agreement be
“specifically approved at least annually” shall be construed in a manner consistent with the
Investment Company Act of 1940 and the rules and regulations thereunder. This Agreement
may be terminated as to any Portfolio at any time, without the payment of any penalty, by the Manager, by
vote of a majority of the Trustees of the Trust or by vote of a majority of the outstanding voting
securities of the Portfolio on not less than 30 days nor more than 60 days written notice to the
Adviser, or by the Adviser at any time without the payment of any penalty, on 60 days written
notice to the Trust. This Agreement will automatically and immediately terminate in the event of
its assignment. Any notice under this Agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the other party at the primary office of such party, unless such
party has previously designated another address.
As used in this Section 11, the terms “assignment,” “interested persons,” and a “vote of a
majority of the outstanding voting securities” shall have the respective meanings set forth in the
Investment Company Act of 1940 and the rules and regulations thereunder, subject to such exemptions
as may be granted by the Securities and Exchange Commission under said Act.
12. Severability. If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be affected
thereby.
A copy of the Declaration of Trust of the Trust is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this instrument is not binding upon
any of the Trustees, officers, or shareholders of the Trust individually.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the day
and year first written above.
| Metropolitan West Capital
Management, LLC Management, LLC |
American Beacon Advisors, Inc. | |||||||||||
By
|
By | |||||||||||
| Name: | Xxxxxxx X. Xxxxx | |||||||||||
| Title: | Chairman | |||||||||||
FORM OF
Schedule A
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon Advisors, Inc.
and
Metropolitan West Capital Management, LLC
to the
American Beacon Funds
Investment Advisory Agreement
between
American Beacon Advisors, Inc.
and
Metropolitan West Capital Management, LLC
American Beacon Advisors, Inc. (the “Manager”) shall pay compensation to Metropolitan West
Capital Management, LLC (the “Adviser”) pursuant to section 4 of the Investment Advisory Agreement
between said for rendering investment management services with respect to the Large Cap Value Fund
in accordance with the following annual percentage rates:
X.XX% on the first $100 million in assets
X.XX% on assets above $100 million
X.XX% on assets above $100 million
In calculating the amount of assets under management solely for the purpose of determining the
applicable percentage rate, there shall be included all other large cap value assets of the
American Airlines, Inc. pension plans also under management by the Adviser.
The Manager shall pay compensation to the Adviser pursuant to section 4 of the Investment
Advisory Agreement between said for rendering investment management services with respect to small
cap value assets in accordance with the following annual percentage rates:
X.XX% on the first $75 million in assets
X.XX% on the next $75 million in assets
X.XX% on assets above $150 million
X.XX% on the next $75 million in assets
X.XX% on assets above $150 million
In calculating the amount of assets under management solely for the purpose of determining the
applicable percentage rate, there shall be included all other small cap value assets of the
American Airlines, Inc. pension plans also under management by the Adviser.
If the management of the Portfolios commences or terminates at any time other than the
beginning or end of a calendar quarter, the fee shall be prorated based on the portion of such
calendar quarter during which the Agreement was in force.
DATED: September 12, 2008
